Experts’ Views on Real Estate Market Health are Challenged by China’s Strong Foreign Money Flow.

Terry Barklay
3 min readAug 16, 2021

Is all this talk about China’s bloated real estate market by overseas experts just that — chatter? real estate qatar

This is an issue raised by Business China, an online journal with satellite offices in Guangzhou, Shanghai, and Beijing, especially after noting a steady infusion of foreign capital into China’s real estate markets.

a company According to Ministry of Commerce data, foreign capital actually used in May increased 13.43 percent year on year to $9.23 billion, while foreign investments in real estate increased 57.3 percent year on year to RMB 26.6 billion in the first five months.

In comparison, domestic bank loans increased by only 4.6 percent in the same 5-month period, totaling RMB 580.3 billion, according to official data.

In the first quarter of this year, foreign investment provided 39 percent of capital to Chinese developers, compared to 25 percent in full-year 2010. According to the China Securities Journal, which quoted data from E-Commercial China, a significant domestic provider of commercial real estate services, bank loans accounted for 37 percent of overall funding in Q1.

The China Securities Journal reported on Thursday that at least $3 billion in funding from overseas markets went to Chinese developers in the January-March quarter, without specifying the source of the information.

Foreign capital (including Hong Kong and Macao) accounted for RMB 44 billion of the RMB 92 billion spent on purchases in the domestic property market last year, increasing 94 percent from 2009.

According to the State Administration of Foreign Exchange’s 2010 annual report, almost 23% of last year’s foreign investment in China flowed into the real estate industry.

a company The Chinese property market has “been struck with a series of downgrades by foreign financial services corporations in the last couple of months,” according to the country.

According to a report released in April by credit rating firm Moody’s, property developers accounted for 60% of Chinese companies whose outlook was downgraded to “negative” in Q1, and China’s residential home sales could drop by 30% as a result of the housing curbs currently in place in China’s top cities.

Standard & Poor’s downgraded Chinese developers’ outlook from “stable” to “negative” two weeks ago, citing fears that tightened financing and ongoing government property controls would result in a 10% decline in new home prices in the coming months.

If the current pattern continues, S&P expects further rating downgrades in the next year.

Morgan Stanley, a US investment firm, backed with the credit rating agencies in a research, predicting that property prices in China’s major cities will “further drop” in Q3.

Jim Chanos, the American hedge fund manager who anticipated Enron Corp.’s demise in 2001, has previously indicated that a housing meltdown will occur in China at some point in the future.

According to Business China, “the ostensibly gloomy picture of China’s property market being projected by international financial firms amidst the expanding inflow of foreign capital says a lot about those institutions’ true goals.”

“Foreign institutions have a long history of sending false alarms. What they really want is for domestic investors and speculators to panic and exit the market, so that when property values fall, they can jump in,” a Fudan University economist was cited as saying in the China Securities Journal.

According to the China Securities Journal, an official journal, international institutions consistently forecasted a financial disaster owing to China’s banking system in 2002, yet foreign banks made no effort to enter the Chinese banking sector as strategic investors.

Morgan Stanley, which warned in 2004 that China’s property market was bursting at the seams, “set out to buy homes in Shanghai and Beijing at the same time its economists expressed concerns about the industry,” according to Business China.

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Terry Barklay
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A Blog and article writer who is write and discuss about property and real estate.